Dennis Domrzalski, Reporter- Albuquerque Business First
At some point after the federal Affordable Care Act takes effect in January 2014, pretty much every American will have health insurance.
In theory, that means just about every patient that walks through a hospital door will be a paying customer. There will be no, or at least very little, care that hospitals provide for which they won’t be paid.
That idea is leading some policymakers in New Mexico to question whether taxpayers will need to keep providing hospitals with money to care for indigent patients, since, theoretically, there will be very few of them.
In 2012, New Mexico hospitals provided about $300 million in uncompensated care, most of which was subsidized by counties through their taxpayer-funded indigent funds, according to New Mexico Hospital Association CEO Jeff Dye.
In Bernalillo County, the University of New Mexico Hospital gets $90 million a year in property tax money for its operations budget. Technically, that is not indigent care money, said Billy Sparks, executive director of communications and marketing for the UNM Health Sciences Center.
Will taxpayers throughout the state need to keep funding programs to care for the indigent? And will Bernalillo County property owners need to keep funding UNMH to the tune of $90 million a year?
“That is the $16 trillion question, what effect the ACA is going to have on indigent care in Bernalillo County,” said County Commissioner Wayne Johnson. “If you talk to the providers, no one knows how it is going to come out. They’ve all agreed that they don’t know.”
Johnson said he is forming a committee to explore whether the county should continue funding indigent care after the ACA takes effect.
Sparks said studies have shown that in 2020, six years into the ACA, 160,000 New Mexicans will remain uninsured and some indigent care funds will still be needed. UNMH provided $181 million in uncompensated care in Bernalillo County in FY12, Sparks said. Statewide, the total was $198.2 million, he added.
“Even though the goal of the ACA is to have 100 percent insured, the reality could be very different, which is why we have to plan accordingly as the system is put in place,” Sparks said.
Steve Forney, vice president and CFO of Lovelace Health System, said if the ACA works as planned “there will be a greater number of insured individuals and a much lower level of indigent care that needs to be provided. Counties will have to take a look at and revisit their indigent programs because they won’t have to put the same money into them in the future.”
Paul Gessing, executive director of the Rio Grande Foundation, an Albuquerque-based conservative think tank, agreed the issue needs to be studied. However, he said the ACA is so complex that no one knows what the health insurance industry will look like after ACA or how many people will remain uninsured.
“The goal of the law is to dramatically expand insurance. If it doesn’t do that, then we are in deep trouble no matter what [financial] resources are allocated to this new law,” Gessing said.
Dye, whose organization has 45 members, said he is “very cautious about any policies that assume uncompensated care will [be reduced] quickly” and that governments won’t have to reimburse hospitals as much for indigent care. Not every American will suddenly be insured on January 1 when the ACA takes effect, he added.
“It depends on the movement into the new [expanded] Medicaid program and into insurance that might be offered on the insurance exchange,” or online marketplace, the state is building. “We are very concerned that indigent fund money would go away overnight, and we would want to be very cautious about changing any policy or statutes about indigent funding until these things shake out with these various programs.”
The indigent care money that state hospitals receive comes from counties, with some matching federal dollars, Dye said.
New Mexico’s hospitals are facing $961 million in cuts over the next 10 years as a result of Medicare reimbursement reductions mandated by the ACA, as well as possible sequestration cuts, Dye said. And with more insured people going to hospitals for care, the hospitals will be stressed, Dye added.
“To this point hospitals have been cautious about hiring staff. There has been kind of a lull, but the pressure we will face in the next year will place a tremendous demand on the system,” Dye said.
Pending cuts for New Mexico hospitals - 2013-2022
• $697 million in Affordable Care Act cuts
• $152.7 million in sequestration cuts
• $74.5 million in coding adjustment cuts
• $5.5 million in bad debt payment cuts
• $48.9 million in other cuts
Total: $960.7 million
Source: New Mexico Hospital Association